Citi CEO Jane Fraser cautioned the UK government against imposing higher taxes on the banking sector, stating that "money votes with its feet" and viable alternatives exist. She highlighted the significant tax rate difference between London and other financial centers.
The comments from Citi's CEO highlight the potential impact of government fiscal policy on the attractiveness of London as a global financial hub, suggesting that higher taxes could lead to capital flight and reduced investment in the UK.
Jane Fraser, the CEO of Citi, has issued a warning to the UK government regarding potential increases in banking taxes. Fraser stated that "money votes with its feet" and that there are "very viable" alternatives to London should the government decide to impose higher levies on the financial sector.
Fraser, who is credited with turning around the third largest bank in the US, expressed concern about another tax charge on banks in Britain. She noted that maintaining a base in the UK has become more difficult to justify due to the outsized charges leveled on the sector compared to countries like Germany, France, and the US. "Money votes with its feet," Fraser told reporters. "And when you have a tax rate in London which is up around to the 48 per cent level and you’re competing with New York at 27 per cent, or Dublin at about 28, 29 per cent. Even Frankfurt and Paris are lower."
She added that these differences make it a tougher decision to remain in London, which is already one of the most expensive financial centers globally. These comments follow a period of strong earnings for banks, driven by market turmoil. Fraser also voiced concerns about the government's failure to rule out a potential wealth tax and comments from ministers advocating for capital gains tax to be equalized with income tax. She remarked, "You can’t afford everything. You can’t have your cake, eat it, and not put on calories," emphasizing the need to incentivize work and make it attractive to do so. Fraser recalled the high tax rates under the Labour government in the 1970s as a "disaster for the country" that hindered growth and business development, stressing the importance of balance.